Canada has opened a 60-day public consultation on draft regulations for stablecoin issuers that are not financial institutions, including a proposed ban on interest or yield payments to tokenholders. The government gave notice that comments will be accepted until Dec. 23.
The proposals sit under Canada's Stablecoin Act, which was passed in March and is aimed at non-financial institution issuers. According to the government, the draft rules are needed to put that policy into effect and include provisions requiring issuers to register with the Bank of Canada.
What the draft rules would require
The proposed framework sets out several conditions for non-financial institution issuers:
- Issuers would be restricted from offering interest or yield, a measure the government described as intended to discourage holding the tokens.
- Stablecoins would have to be redeemed within three business days of a tokenholder's request.
- Redemption fees could not exceed 1% of the coins' total value.
The government said it intends the regulations to come into force in fall 2027. Once they are in effect, stablecoin issuers in Canada that are not financial institutions would have to apply for registration with the Bank of Canada before issuing a stablecoin.
Alignment with US and other jurisdictions
The draft cites efforts to stay consistent with stablecoin regulations in the United States and other jurisdictions in order to "reduce the overall regulatory burden on multi-jurisdictional issuers."
The US GENIUS Act, which establishes a regulatory framework for stablecoins, is scheduled to take effect in January 2027. In the European Union, the Markets in Crypto Assets (MiCA) framework could give exchanges until January to halt services for stablecoins that do not comply, likely including Tether's USDt (USDT), the largest stablecoin by market capitalization.
Canada's consultation follows earlier work by the country's central bank on the subject. In a related article, Cointelegraph reported that the Bank of Canada laid out criteria for what it considers "good money" stablecoins.
Market participants have until Dec. 23 to submit comments on the proposed framework before the government finalizes the rules ahead of the targeted fall 2027 start date.
